Tesla (TSLA) will report its second-quarter earnings after the market closes on Wednesday, July 23, and Wall Street is preparing for a disappointing set of results. Analysts expect a year-over-year revenue decline of around 11%, bringing quarterly sales to approximately $22.7 billion, while earnings per share (EPS) are forecasted between $0.33 and $0.40, a drop of as much as 36% compared to last year.

Tesla delivered 384,122 vehicles in Q2, down 13% from the same period in 2024, reflecting growing pressure from slowing global EV demand, aggressive competition, and the expiration of various EV tax credits. Rising tariffs and shifting policies have also weighed on margins, raising concerns about Tesla’s near-term profitability.

Despite this weakness, investor attention is rapidly shifting to Tesla’s long-term AI strategy. Elon Musk has reportedly been working extended hours at the company’s headquarters and has teased significant updates related to Tesla’s robotaxi platform and its humanoid robot, Optimus. Analysts widely agree that this quarter’s real story isn’t the short-term numbers, it’s the future narrative around autonomy and AI-driven revenue.

Dan Ives of Wedbush recently called Tesla’s current position a “positive crossroads,” suggesting that if Musk re-centers on core tech and execution, Tesla can re-capture market leadership in the autonomy race. Bank of America, which recently raised its price target to $341, sees "outsized potential" in Tesla's robotaxi platform despite current revenue risk. Meanwhile, Morgan Stanley continues to rate Tesla as a top pick with a price target of $410, while Cantor Fitzgerald remains optimistic about long-term autonomy growth, even as it forecasts lower-than-consensus Q2 revenue around $21 billion.

Still, challenges remain. Shrinking margins from delivery shortfalls, vehicle discounts, and increased promotional activity are eroding profits. There’s also a growing concern that Musk’s political ventures could distract from Tesla’s operational priorities and analysts warn that if the company’s forward-looking narrative falls flat, investors may quickly lose patience.

Tesla’s earnings call will be closely watched for clarity on several fronts. The market is looking for meaningful updates on the robotaxi roadmap, including any timeline or rollout progress from the Austin pilot program. Commentary on Optimus, Tesla’s humanoid robot project, could also sway sentiment depending on whether Musk provides tangible benchmarks or timelines. Investors will also be listening closely for updates on margin trends, potential cost-cutting initiatives, and whether Tesla chooses to reaffirm or revise its full-year guidance.

Tesla is at a pivotal juncture. While the Q2 numbers may fall short, Musk’s ability to tell a compelling story about the company’s future in AI and autonomy could determine whether this earnings release marks a strategic reset or a loss of momentum. Expect sharp price movement following the report, the narrative will matter just as much as the numbers.